This treatment is extended to cover cases where the same result is obtained indirectly as well as directly and also where the result is obtained where five or fewer individuals who control a corporation transfer property directly or indirectly to a transferee corporation.

(47) Section 238: Tax liens.-A purchaser, a mortgagee, or pledgee of a motor vehicle will not be subject to a Federal tax lien against the motor vehicle, notice of which has been publicly filed unless the purchaser, mortgagee, or pledgee has actual knowledge of the existence of the lien. (This is a committee amendment.)

(48) Section 301: Optional tax tables. Optional tax tables are provided for those with adjusted gross income of less than $5,000 for the year 1964 and for 1965 and for subsequent years. These tables reflect the rate reductions for individuals referred to in section 111 above.

(49) Section 302: Withholding.-Provision is made for a withholding rate of 14 percent in lieu of the 18 percent applicable under present law. This is to apply to payments made after the seventh day following the date of enactment of this bill. (Under the House bill, the withholding rate for 1964 would have been 15 percent and for 1965 and subsequent years, 14 percent.) Withholding rate tables to reflect this 14-percent withholding rate are also provided.

HOUSE PROVISIONS DELETED BY COMMITTEE ACTION

(1) Sickness and accident policies.-The committee deleted a provision which would provide that where an individual is covered by more than one sickness or accident policy and receives payments under two or more such policies with respect to the same accident or illness, the excess of any amount received over the cost of these expenses would have been treated as taxable income.

(2) Carrying charges.-The committee deleted a provision providing that an interest deduction is to be available for so much of separately stated "carrying charges" as do not exceed a 6-percent interest charge on the declining balance for payments with respect to services, in the same manner as present law provides in the case of purchases of tangible personal property.

(3) Foreign personal holding companies.-The committee deleted a House provision which would provide an increase in basis for a shareholder of a foreign personal holding company upon his death equal to the estate taxes he pays with respect to the appreciation in value on his stock in the foreign personal holding company. In addition, under the deleted provision the liquidation of foreign personal holding companies for a limited period of time would be permitted under section 333 which provides for the taxation of accumulated earnings and profits to the shareholder as dividends but provides no tax to him with respect to the appreciation in value of property before December 31, 1953.

(4) Capital gains and losses.-The committee deleted a House provision which would subdivide long-term capital gains into two categories: (A) Those held for more than 2 years; and (B) those held for between 6 months and 2 years. Only 40 percent of the gains

attributable to assets held more than 2 years would be includible in the tax base, and these gains would be subject to a maximum rate of 21 percent. For the other assets, present law would continue with the present 50-percent inclusion factor and the 25-percent maximum rate. Certain assets not considered "true" capital assets would receive this treatment without regard to how long they were held. In addition, the committee deleted a House provision which would have provided an indefinite loss carryover for capital losses in the case of individuals in lieu of the 5-year carryover under present law.

AS APPROVED BY SENATE COMMITTEE ON FINANCE